Cable news has been predominately focused on the Charter and Time Warner Cable deal for $79 billion; Will regulators allow it? How is it good and bad for the cable industry? What should consumers expect from their cable providers moving forward? Over the next few days, I will be giving you a look at the good and bad outcomes for both cable and its consumers.
Positives for the Cable Industry
Charter could potentially be seen as a stronger competitor towards Comcast because of its buying power and ability to deliver better rates for customers. There is also the discussion of an “a la carte” model, which again would enable Charter to negotiate their rates and integrate an internet model that customers want. Charter will be closer to Comcast in a customer base situation; Charter will now have 24 million customers, compared to Comcast’s 27 million.
Charter acquiring TWC vs. Comcast
Charter would acquire more than 19 million high-speed Internet customers nationwide, 17.3 million cable TV customers and a growing list of commercial customers with the TWC deal.
The deal values TWC at $195.71 a share, gaining them over 7% of their current stock three days ago, and Charter has risen over 2%. The deal also requires Charter to pay at least $56.7 billion for TWC’s outstanding shares; the value of the deal could increase for TWC if the stakeholders take advantage of the option to receive more cash and less stock.
Customers could potentially see lower prices for cable services because Charter and TWC combined would be in a stronger position to negotiate rates from content providers and equipment manufacturers.
Charter is so confident in the deal’s approval and its benefits for consumers that they included a $2B penalty to TWC if the deal falls through.